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FRENZIED 
LIBERTY 



THE MYTH OF 
"A RICH MAN'S WAR" 

BV 

Otto H. Kahn 



EXTRACTS FROM ADDRESS 
GIVEN AT THE UNIVERSITY 
OF WISCONSIN, JAN. 14, 1918 



FRENZIED 


LIBERTY 


THE MYTH OF 


*'A RICH MAN'S WAR" 


BY 


Otto H. Kahn 


EXTRACTS FROM ADDRESS 
GIVEN AT THE UNIVERSITY 
OF WISCONSIN, JAN. 14, 1918 






Gilt 
Anthme 

m^ 8 f9!g 



i 



Part One 

Frenzied Liberty 



Frenzied Liberty 



% ^ / i^ are engaged m a war, an ''irre- 
%^ pressible conflict," a most just and 
▼ ' righteous war for a cause as high 
and noble as ever inspired a people to put 
forth its utmost of sacrifice and valor. To 
attain the end for which this peace-loving 
nation unsheathed its sword, to lay low 
and make powerless the accursed spirit 
which brought all this unspeakable misery, 
sorrow and ruin upon the world, is our 
one and supreme and unshakeable pur- 
pose. 

That is the purpose of the people of 
Wisconsin as it is the purpose of the 
people of New York and of every other 
State in the Union. I give no credence to 
and have no patience with those who 
would measure as with a thermometer 
the loyalty temperature of our commun- 
ities. 

—5— 



Frenzied Liberty 

Some dreamers there may be, here as 
everywhere, so immersed in their dreams 
that the trumpet call of the day has not 
yet awakened them. 

Some politicians there may be, here and 
elsewhere, so obsessed by the issues which 
heretofore were good election assets and 
so unable to shake off the inveterate 
habits and the formulas and calculations 
of a lifetime, that they are unable to 
recognize and to share in the sudden 
flaming manifestations springing from 
the deep of the people's soul — and after a 
while, looking around for their usual 
followers, find themselves in chilly loneli- 
ness. 

Some there are, a small minority al- 
ways and getting smaller every day, 
among Americans of German birth or 
descent who lack the vision to see their 
duty or the strength to follow it, and who 
stand irresolute, hesitant and dazed. 

The vast and overwhelming majority 
have acted like true men and loyal Ameri- 
cans. They are entitled to claim your 
sympathetic understanding for the heart- 
ache which is theirs and they are entitled 
to claim your trust. It will not be mis- 
placed. 



Frenzied Liberty 

I am taking very little account of that 
insignificant number of men of German 
origin who, misguided or corrupt, dare by 
insidious and underground processes to 
attempt to weaken or oppose the resolute 
will of the Nation. There are too few of 
them to count and their manoeuvres are 
too clumsy to be effective. But let them 
be warned. There is sweeping through 
the country a mighty wave of stern and 
grim determination, which bodes ill for 
anyone standing in its way. 

II 

ONE element only there is in our 
population which does deliberately 
challenge our national unity. I 
mean the militant Bolsheviki in our midst, 
the preachers and devotees of liberty run 
amuck, who would place a visionary class 
interest above patriotism and who in 
ignorant fanaticism would substitute for 
the tyranny of autocracy the still more 
intolerable tyranny of mob-rule, as for 
the time being they have done in Russia. 
If it were not for the disablement of 
Russia, the battle against autocracy 

—7— 



Frenzied Liberty 

would have been won by now. As so 
often before, liberty has been wounded 
in the house of its friends. Liberty in 
the wild and freakish hands of fanatics 
has once more, as frequently in the past, 
proved the effective helpmate of autoc- 
racy and the twin brother of tyranny. 

Out-czaring the czar, its votaries are 
filling the prisons with their political op- 
ponents, are practising ruthless spolia- 
tion and savage oppression, and are main- 
taining their self-constituted rule by the 
force of bayonets. Riot, robbery, famine, 
fratricidal strife are stalking through the 
land. 

The deadliest foe of democracy is not 
autocracy but liberty frenzied. 

Liberty is not fool-proof. For its benefi- 
cent working it demands self-restraint, 
a sane and clear recognition of the prac- 
tical and attainable and of the fact that 
there are laws of nature which are 
beyond our power to change. 

Liberty can, does and must limit the 
rights of the strong, it must increasingly 
guard and promote the well-being of 
those endowed with lesser gifts for the 

—8— 



Frenzied Liberty 

struggle for existence and success, it 
must strive in every way consistent with 
sane recognition of the reahties to make 
life more worth living to those whose 
existence is cast in the mould of the vast 
average of mankind ; it must give political 
equality, equality before the law ; it must 
throw wide open to talent and worth the 
door of opportunity. 

But it must not attempt in fatuous 
recklessness to make over humanity on 
the pattern of absolute equality. If and 
when it does so attempt, it will fail as 
that attempt has always failed through- 
out history. For an inscrutable Provi- 
dence has made inequality of endowment 
a fundamental law of nature, animate as 
well as inanimate, and from inequality of 
physical strength, of brain power and of 
character, springs inevitably the fact of 
inequality of results. 

Envy, demagogism, utopianism, well- 
meaning uplift agitation may throw 
themselves against that basic law of 
all being, but the clash will create 
merely temporary confusion, destruction 
and anarchy, as in Russia; and after 
a little while and much suffering, 
—9— 



Frenzied Liberty 

the supremacy of sanely restrained in- 
dividualism over frenzied collectivism 
will reassert itself. 

Ill 

UNDER the system of wisely ordered 
liberty, combined with incentive 
to individual effort whereof the 
foundation was laid by the far-sighted and 
enlightened men who created this nation 
and endowed it with the most sagacious 
instrument of government that the wit of 
man has devised, America has grown and 
prospered beyond all other nations. 

It has stood as a republic for nearly a 
century and a half, which is far longer 
than any other genuine republic has en- 
dured amongst the great nations of the 
world since the beginning of the Christian 
era. Its past has been glorious, the vista 
of its future is one of boundless oppor- 
tunity, of splendid fruitf ulness for its own 
people and the world, if it remains but 
true to its principles and traditions, ad- 
justing their expression and application to 
the changing needs of the times in a spirit 
of progress, sympathetic understanding 

—10— 



Frenzied Liberty 

and enlightened justice, but rejecting the 
teachings and temptations of false, 
though plausible prophets. 

More and more, of late, do we see the 
very foundations of that majestic and 
beneficent structure clamorously assailed 
by some of those to whom the great re- 
public generously gave asylum and to 
whom she opened wide the portals of her 
freedom and her opportunities. 

These people with many hundreds of 
thousands of their countrymen came to 
our free shores after centuries of oppres- 
sion and persecution. America gave 
them everything she had to give — the 
great gift of the rights and liberties of 
citizenship, free education in our schools 
and universities, free treatment in our 
clinics and hospitals, our boundless op- 
portunities for social and material ad- 
vancement. 

Most of them have proved themselves 
useful and valuable elements in our many- 
rooted population. Some of them have 
accomplished eminent achievements in 
science, industry and the arts. Certain 
of the qualities and talents which they 
contribute to the common stock are of 
great worth and promise. 
—11— 



Frenzied Liberty 

But some of them there are who have 
shown themselves unworthy of the trust 
of their fellow-citizens ;/ingrates, disturb- 
ers, ignorant of or disloyal to the spirit of 
America, abusers of her hospitality. 

Some there are who have been blinded by 
the glare of liberty as a man is blinded who 
after long confinement in darkness, comes 
suddenly into the strong sunlight. Blinded, 
they dare to aspire to force their guidance 
upon Americans who for generations have 
walked in the light of liberty. 

They have become drunk with the strong 
wine of freedom, these men who until they 
landed on America's coasts had tasted noth- 
ing but the bitter water of tyranny. Drunk, 
they presume to impose their reeling gait 
upon Americans to whom freedom has been 
a pure and refreshing fountain for a century 
and a half. 

Brooding in the gloom of age-long op- 
pression, they have evolved a fantastic and 
distorted image of free government. In 
fatuous effrontery they seek to graft the 
growth of their stunted vision upon the 
splendid and ancient tree of American 
institutions. 



—12- 



Frenzied Liberty 

IV 

W 7"E will not have it so, we who are 
Y^ Americans by birth or adoption. 

" " We reject these impudent preten- 
sions. Changes the American people will 
make as their need becomes apparent, im- 
provements they welcome, the greatest 
attainable well-being for all those under 
our national roof -tree is their aim; but 
they will do all that in the American way 
of sane and orderly progress — and in none 
other. 

Against foes within no less than against 
enemies without they will know how to 
preserve and protect the splendid structure 
of light and order which is the great and 
treasured inheritance of all those who 
rightly bear the name Americans, of 
which the stewardship is entrusted to 
them and which, God willing, they will 
hand on to their children sound and 
wholesome, unshaken and undefiled. 

The time is ripe and over-ripe to call a 
halt upon these spreaders of outlandish 
and pernicious doctrines. The American 
is indulgent to a fault and slow to wrath. 
But he is now passing through a time of 

—13— 



Frenzied Liberty 

tension and strain. His teeth are set and 
his nerves on edge. He sees more closely 
approaching every day the dark valley 
through which his sons and brothers must 
pass and from which too many, alas, will 
not return. It is an evil time to cross 
him. He is not in the temper to be 
trifled with. He is apt very suddenly to 
bring down the indignant fist of his might 
upon those who would presume on his 
habitual mood of easy-going good nature. 

When I speak of the militant Bolshe- 
viki in our midst as foes of national 
unity I mean to include those of American 
stock who are their allies, comrades or 
followers — those who put a narrow class 
interest and a sloppy internationalism 
above patriotism, with whom class hatred 
and envy have become a consuming pas- 
sion, whom visionary obsessions and a 
false conception of equality have inflamed 
to the point of irresponsibility. But I am 
far from meaning to reflect upon those 
who, while determined Socialists, are 
patriotic Americans. 

I believe the Socialistic state to be an 
impracticable conception, a Utopian 
dream, human nature being what it is, 

—14— 



Frenzied Liberty 

and the immutable laws of nature being 
what they are. But there is not a little in 
Socialistic doctrine and aspirations that is 
high and noble; there are things, too, that 
are achievable and desirable. 

And to the extent that Socialism is an 
antidote to and a check upon excessive 
individualism and holds up to a busy and 
self-centered and far from perfect world, 
grievances to be remedied, wrongs to be 
righted, ideals to be striven for, it is a 
force distinctly for good. 

Still less do I mean to reflect upon the 
labor union movement, which I regard as 
an absolutely necessary element in the 
scheme of our economic life. Its leaders 
have acted with admirable patriotism in 
this crisis of the Nation, and on the whole 
have been a factor against extreme 
tendencies and irrational aspirations. 

Trades unions have not only come to 
stay, but they are bound, I think, to be- 
come an increasingly potent factor in our 
industrial life. I believe that the most 
effective preventive against extreme 
State Socialism is frank, free and far- 
reaching co-operation between business 
and trades unions sobered and broadened 

—15— 



Frenzied Liberty 

increasingly by enhanced opportunities, 
rights and responsibilities. 



Business must not deal grudgingly 
with labor. We business men must not 
look upon labor unrest and aspirations as 
temporary ^'troubles," as a passing phase, 
but we must give to labor willing and 
liberal recognition as partner with capi- 
tal. We must under all circumstances 
pay as a minimum a decent living wage to 
everyone who works for a living. We 
must devise means to cope with the prob- 
lem of unemployment and to meet the 
dread advent of sickness, incapacity and 
old age in the case of those whose means 
do not permit them to provide for a rainy 
day. 

We must bridge the gulf which now 
separates the employer and the employee, 
the business man and the farmer, if the 
existing order of civilization is to persist. 
We must welcome progress and seek to 
further social justice. We must translate 
into effective action our sympathy for and 

—16— 



Frenzied Liberty 

our recognition of the rights of those 
whose life, in too many cases, is now a 
hard and weary struggle to make both 
ends meet, and who too often are op- 
pressed by the gnawing care of how to 
find the wherewithal to provide for them- 
selves and their families. We must, by 
deeds, demonstrate convincingly the gen- 
uineness of our desire to see their burden 
lightened. 

We must all join in a sincere and sus- 
tained effort towards procuring for the 
masses of the people more of ease and 
comfort, more of the rewards and joys of 
life than they now possess. I believe 
this is not only our duty but our inter- 
est, because if we wish to preserve the 
fundamental lines of our present social 
system we must leave nothing practicable 
undone to make it more satisfactory and 
more inviting than it is now to the vast 
majority of those who toil. And I do not 
mean those only who toil w ith their hands, 
but also the professional men, the men 
and women in modest salaried positions, 
in short, the workers in every occupation. 

Even before the war, a great stirring 
and ferment was going on in the land. 

—17— 



Frenzied Liberty 

The people were groping, seeking for a 
new and better condition of things. The 
war has intensified that movement. It 
has torn great fissures in the ancient 
structure of our civilization. To restore 
it will require the co-operation of all 
patriotic men of sane and temperate 
views, whatever may be their occupation 
or calling or political affiliations. It can- 
not be restored just as it was before. 

The building must be rendered more 
habitable and attractive to those whose 
claim for adequate houseroom cannot 
be left unheeded, either justly or safely. 
Some changes, essential changes, must 
be made. 

I have no fear of the outcome and of the 
readjustment which must come. I have 
no fear of the forces of freedom unless 
they be ignored, repressed or falsely and 
selfishly led. 

But this is not the time for settling 
complex social questions. When your 
house is being invaded by burglars you 
do not discuss family questions. Let us 
win the war first. Nothing else must now 
be permitted to occupy our thoughts and 
divert our aims. 

—18— 



Frenzied Liberty 

When we shall have attained victory 
and peace, then will be the time for us to 
sit down and reason together and make 
such changes in political and social con- 
ditions as, after full and fair discussion, 
free from heat and passion, the enlight- 
ened public opinion of the country deems 
requisite. 



—19— 



Part Two 

The Myth of 
A Rich Man's War" 



The Myth of 
''A Rich Mans War" 

SINCE Pacifism and semi-seditious 
agitation have become both unpop- 
ular and risky, the propagandists of 
disunion have been at pains in endeavoring 
to insidiously affect public sentiment by 
spreading the fiction that America's 
entrance into the war was fomented by 
"big business" from selfish reasons and for 
the purpose of gain. In the same line of 
thought and purpose they proclaim that 
this is "a rich man's war and a poor man's 
fight" and that wealth is being taxed here 
with undue leniency as compared to the 
burden laid upon it in other countries. 

These assertions are in flat contradic- 
tion to the facts : 

Nothing is plainer than that business 
and business men had everything to gain 
by preserving the conditions which ex- 
isted during the two and a half years prior 
to April, 1917, under which many of them 

—23— 



The Myth of ^^A Rich Man's War" 

made very large profits by furnishing 
supplies, provisions and financial aid to 
the Allied nations, taxes were light and 
this country was rapidly becoming the 
great economic reservoir of the world. 

Nothing is plainer than that any sane 
business man in this country must have 
foreseen that if America entered the war 
these profits would be immensely reduced, 
and some of them cut off entirely, be- 
cause our Government would step in and 
take charge; that it would cut prices right 
and left, as in fact it has done; that 
enormous burdens of taxation would have 
to be imposed, the bulk of which would 
naturally be borne by the well-to-do; in 
short, that the unprecedented golden 
flow into the coffers of business was bound 
to stop with our joining the war; or, at 
any rate, to be much diminished. 

The best indication of the state of 
feeling of the financial community is 
usually the New York Stock Exchange. 
Well, every time a ship with Americans 
on board was sunk by a German sub- 
marine in the period preceding our en- 
trance into the war, the stock market 
shivered and prices declined. 

—24— 



The Myth of "A Rich Man's War" 

When, a Httle over a year ago, Secre- 
tary Lansing declared that we were "on 
the verge of war," a tremendous smash in 
prices took place on the Stock Exchange. 
That does not look, does it, as if rich men 
were particularly eager to bring on war or 
cheered by the prospect of having war? 

But, it is said, the big financiers of New 
York were afraid that the money loaned 
by them to the Allied nations might be 
lost if these nations were defeated, and 
therefore they manoeuvred to get America 
into the war in order to save their in- 
vestments. A moment's reflection will 
show the utter absurdity of that charge. 

American bankers have loaned to the 
Allied nations — almost entirely to the 
two strongest and wealthiest among them, 
France and England — about two billions 
of dollars since the war started in 1914. 

These two billions of dollars of Allied 
bonds are not held, however, in the 
coffers of Eastern bankers, but have been 
distributed throughout the country and 
are being owned by thousands of banks 
and other corporations and individuals. 

Moreover, they form an insignificant 
portion of the total debts of the Allied 

—25— 



The Myth of '^A Rich Man's War" 

nations; they are offset a hundredfold by 
their total assets. Even if those nations 
were to have lost the war it is utterly in- 
conceivable that they would ever have 
defaulted upon that particular portion of 
their debt, because, being their foreign 
debt, it has a special standing and in- 
trinsic security. 

It is upon the punctual payment of its 
foreign obligations that a nation's credit 
in the markets of the world largely 
depends, and the maintenance of their 
world credit was and is absolutely vital 
to England and France. Furthermore, 
the greater portion of these obligations 
was secured by the deposit of collateral 
in the shape of American railroad and 
other bonds, etc., which were more than 
suflficient in value to cover the debt. 

But let us assume for argument's sake 
that the Allies had been defeated and had 
defaulted, for the time being, upon these 
foreign debts; let us assume that the en- 
tire amount of Allied bonds placed in 
America had been held by rich men in 
New York and the East instead of being 
distributed, as it is, throughout the 
country. Why, is it not perfectly mani- 

—26— 



The Myth of ^^A Rich Man's War" 

fest that a single year's American war 
taxation and reduction of profits would 
take out of the pockets of such assumed 
holders a vastly greater sum than any 
possible loss they could have suffered by 
a default on their Allied bonds, not to 
mention the heavy taxation which is 
bound to follow the war for years to 
come and the shrinkage of fortunes 
through the decline of all American 
securities in consequence of our entrance 
into the war? 

Is it not perfectly manifest to the 
meanest understanding that any business 
man fomenting our entrance into the war 
for the purpose of gain must have been 
entirely bereft of his senses and would 
have been a fit subject for the ap- 
pointment of a guardian to take care of 
himself and his affairs? 



II 



NOW as to the allegations concerning 
taxation: 1. The largest incomes 
are taxed far more heavily here 
than anywhere else in the world. 

—27— 



The Myth of ^^A Rich Man's War" 

The maximum rate of income taxation 
here is 67%. In England it is 42>^%. 
Ours is therefore 50% higher than Eng- 
land's and the rate in England is the 
highest prevailing anywhere in Europe. 
Neither republican France nor demo- 
cratic England — containing in their cabi- 
nets Socialists and representatives of 
labor — nor autocratic Germany have an 
income tax rate anywhere near as high as 
our maximum rate. And in addition to 
the federal tax we must bear in mind our 
state and municipal taxes. ' 

2. Moderate and small incomes, on the 
other hand, are subject to a far smaller 
rate of taxation here than in England. 

In America, incomes of married men 
up to $2,000 are not subject to any 
federal income tax at all. 

In England the tax on incomes of $1,000 is 43^% 
In England the tax on incomes of 1,500 is 6J^% 
In England the tax on incomes of 2,000 is 7j^% 

(These are the rates if the income is 
derived from salaries or wages; they are 
still higher if the income is derived from 
rents or investments.) 

The English scale of taxation on in- 
comes of, say, $3,000, $5,000, $10,000 and 

—28— 



The Myth of ^'A Rich Man's War" 

$15,000, respectively averages as follows, 
as compared to the American rates for 
married men: 





In 


In 




England 


America 


Income tax rate on $3,000 . . 


. 14% 


%oii% 


Income tax rate on 5,000 . . 


. 16% 


VAVo 


Income tax rate on 10,000 . . 


. 20% 


3y2% 


Income tax rate on 15,000 . . 


• 25% 


5% 



(If we add the so-called "occupational" 
tax, our total taxation on incomes of 
$10,000 is 6^%, and on incomes of 
$15,000, 93^%.) 

In other words, our income taxation is 
more democratic than that of any other 
country, in that the largest incomes are 
taxed much more heavily, and the small 
and moderate incomes much more lightly 
than anywhere else, and incomes up to 
$2,000 for married men not taxed at all. 

3. It is true, on the other hand, that 
on very large incomes as distinguished 
from the largest incomes, our income tax 
is somewhat lower than the English tax, 
but the difference by which our tax is 
lower than the English tax is incompar- 
ably more pronounced in the case of 
small and moderate incomes than of 
large incomes. Moreover, if we add to 

—29— 



The Myth of ''A Rich Man's War'' 

our income tax our so-called excess 
profit tax, which is merely an additional 
income tax on earnings derived from 
business, we shall find that the total tax 
to which rich men are subject is in the 
great majority of cases heavier here than 
in England or anywhere else. 

4. It is likewise true that the English 
war excess profit tax is 80% (less various 
offsets and allowances) whilst our so- 
called excess profit tax ranges from 20% 
to 60%. 

But it is entirely misleading to base a 
conclusion as to the relative heaviness of 
the American and British tax merely on 
a comparison of the rates, because the 
English tax is assessed on a wholly dif- 
ferent basis from the American tax. As 
a matter of fact, Congress has estimated 
that the 20% to 60% tax on the American 
basis will produce approximately the 
same amount in dollars and cents as the 
80% tax is calculated to produce in 
England. (I know I shall be answered 
that we have twice the population of 
England and twice the wealth. But it 
must be borne in mind that a far larger 
proportion of our wealth is represented 

—30— 



The Myth of ^'A Rich Man's War" 

by farms and other non-industrial prop- 
erty and that a far larger proportion of 
our people than of the British people are 
engaged in agricultural pursuits which 
are not affected by the excess profit tax. 
I believe it will be found that the total 
wealth employed in business in America 
is not so greatly superior to the total 
wealth similarly employed by Great 
Britain.) 

The American excess profit law so-called 
taxes all profits derived from business over 
and above a certain moderate percentage, 
regardless of whether or not such profits 
are the result of war conditions. The 
American tax is a general tax on income 
derived from business, in addition to the 
regular income tax. The English tax 
applies only to excess ivar profits; that is, 
only to the sum by which profits in the 
war years exceed the profits on the three 
years preceding the war, which in Eng- 
land were years of great prosperity. 

In other words, the English tax is 
nominally higher than ours, but it 
applies only to war profits. The normal 
profits of business, i. e., the profits which 
business used to make in peace time, 

—31— 



The Myth of ''A Rich Man's War" 

are exempted in England. There, only the 
excess over peace profits is taxed. Our tax, 
on the contrary, applies to all profits over 
and above a very moderate rate on the 
money invested in business. 

In short, our law-makers have decreed 
that normal business profits are taxed 
here much more heavily than in England, 
while direct war profits are taxed less 
heavily. You will agree with me in 
questioning both the logic and the justice 
of that method. It would seem that it 
would be both fairer and wiser and more 
in accord with public sentiment if the 
tax on business in general were decreased 
and, on the other hand, an increased tax 
were imposed on specific war profits. 

5. Our federal inheritance tax is far 
higher than it is in England or anywhere 
else. The maximum rate here on direct 
descendants is 27^/2% ^s against 20% in 
England. In addition to that we have 
State inheritance taxes which do not 
exist in England. 

6. Of her total actual war expenditures 
(exclusive of loans to her Allies and in- 
terest on war loans), England has raised 
less than 15% by taxation (France and 

—32— 



The Myth of '^A Rich Man's War" 

Germany far less), while America is 
about to raise by taxation approximately 
28% of her total war requirements (ex- 
clusive of loans to the Allied nations and 
of the amount to be invested in mer- 
cantile ships, which, being a productive 
investment, cannot properly be classed 
among war expenditures.) 



Ill 



MUCH is being said about the 
plausible sounding contention that 
because a portion of the young 
manhood of the Nation has been con- 
scripted, therefore money also must be 
conscripted. Why, that is the very 
thing the Government has been 
doing. It has conscripted a portion, a 
relatively small portion, of the men of the 
Nation. It has conscripted a portion, a 
large portion, of the incomes of the Nation. 
If it went too far in conscripting men, the 
country would be crippled. If it went 
too far in conscripting incomes and earn- 
ings, the country would likewise be 
crippled. 

—33— 



The Myth of "A Rich Man's War" 

Those who would go further and con- 
script not only incomes but capital, I 
would ask to answer the riddle not only 
in what equitable and practicable manner 
they would do it,* but what the Nation 
would gain by it? 

Only a trifling fraction of a man's 
property is held in cash. If they con- 
script a certain percentage of his posses- 
sions in stocks and bonds, what would the 
Government do with them? 

Keep them? That would not answer 
its purpose, because the Government 
wants cash, not securities. 

Sell them? Who is to buy them when 
everyone's funds would be depleted? 

If they conscript a certain percentage 
of a man's real estate or mine or farm or 
factory, how is that to be expressed and 
converted into cash? 

Are conscripted assets to be used as a 
basis for the issue of Federal Reserve 
Bank Notes? That would mean gross 

*It is true that a few years ago a capital levy was made in 
Germany, but the percentage of that levy was so small as to 
actually amount to no more than an additional income tax, 
and that at a time when the regular income tax in Germany 
was very moderate as measured by the present standards of 
income taxation. 

—34— 



The Myth of '^A Rich Man's War" 

inflation with all its attendant evils, 
dangers and deceptions. 

Would they repudiate a percentage of 
the National debt? Repudiation is no 
less dishonorable in a people than in an 
individual, and the penalty for failure to 
respect the sanctity of obligations is no 
different for a nation than for an in- 
dividual. 

The fact is that the Government would 
gain nothing in the process of capital 
conscription and the country would be 
thrown into chaos for the time being. 
The man who has saved would be penal- 
ized, he who has wasted would be favored. 
Thrift and constructive effort, resulting 
in the needful and fructifying accumula- 
tion of capital would be arrested and 
lastingly discouraged. 

I can understand the crude notion of 
the man who would divide all possessions 
equally. There would be mighty little 
coming to anyone by such distribution 
and it is, of course, an utterly impossible 
thing to do, but it is an understandable 
notion. But by the confiscation of 
capital for Government use neither the 
Government nor any individual would be 
benefited. 

—35— 



The Myth of ''A Rich Man's War" 

A vigorously progressive income tax is 
both economically and socially sound. 
A capital tax is wholly unsound and 
economically destructive. It may never- 
theless become necessary in the case of 
some of the belligerent countries to 
resort to this expedient, but I can con- 
ceive of no situation likelv to arise which 
would make it necessary or advisable in 
this country. More than ever would 
such a tax be harmful in times of war and 
post-bellum reconstruction, when beyond 
almost all other things it is essential to 
stimulate production and promote thrift, 
and when everything which tends to 
have the opposite effect should be rigor- 
ously rejected as detrimental to the 
Nation's strength and well-being. 

There is an astonishing lot of hazy 
thinking on the subject of the uses of 
capital in the hands of its owners. The 
rich man can only spend a relatively 
small sum of money unproductively or 
selfishly. The money that it is in his 
power to actually waste is exceedingly 
limited. The bulk of what he has must be 
spent and used for productive purposes, 
just as would be the case if it were spent 

—36— 



The Myth of "A Rich Man's War'* 

by the Government, with this diflPerence, 
however, that, generally speaking, the 
individual is more painstaking and dis- 
criminating in the use of his funds and at 
the same time bolder, more imaginative, 
enterprising and constructive than the 
Government with its necessarily bureau- 
cratic and routine regime possibly could 
be. Money in the hands of the in- 
dividual is continuously and feverishly 
on the search for opportunities, i. e., for 
creative and productive use. In the 
hands of the Government it is apt to lose 
a good deal of its fructifying energy and 
ceaseless striving and to sink instead into 
placid and somnolent repose. 

Taxation presupposes earnings. Our 
credit structure is based upon values, and 
values are largely determined by earnings. 
Shrinkage of values necessarily affects our 
capacity to provide the Government with 
the sinews of war. 

There need not be and there should 
not be any conflict between profits 
and patriotism. I am utterly opposed 
to those who would utilize their country^'s 
war as a means to enrich themselves. 
Extortionate profits must not be 

—37— 



The Myth of ^^A Rich Man's War" 

tolerated, but, on the other hand, there 
should be a reasonably liberal disposition 
toward business and a willingness to see 
it make substantial earnings. To deny 
this is to deny human nature. 

Men will give their lives to their country 
as a matter of plain and natural duty; 
men, without a moment's hesitation, will 
quit their business and devote their entire 
time and energy and effort to the affairs 
of the Nation, as a great many have 
done and every one of us stands ready to 
do, without any thought of compensation. 
But, generally speaking, men will not 
take business risks, will not venture, will 
not be enterprising and constructive, will 
not take upon themselves the responsi- 
bilities, the chance of loss, the strain, the 
wear and tear and worry and care of in- 
tense business activity if they do not have 
the prospect of adequate monetary re- 
ward, even though a large part of that 
reward is taken away again in the shape 
of taxation. 



38— 



The Myth of ''A Rich Man's War" 

IV 

REVERTING now to the subject of 
the conscription of men, I know I 
• speak the sentiment of all those be- 
yond the years of young manhood when I 
say that there is not one of us worthy of the 
name of a man who would not willingly go 
to fight if the country needed or wanted us 
to fight. But the country does not want or 
call its entire manhood to fight. It does 
not even call anywhere near its entire 
young manhood. It has called, or in- 
tends to call in the immediate future, 
perhaps 25% of its men between 20 and 
30 years of age, which means probably 
about 4% of its total male population of 
all ages. In other words, it calls only for 
such number of men as appears indicated 
by the needs of the country, and as 
corresponds to a prudent estimate of the 
task before it. 

I am far from meaning to compare the 
loss of income or profits with the risk of 
life or health to which men on the firing 
line are exposed, or to compare financial 
sacrifices to those willingly and proudly 
borne by the youth of our land and shared 

—39— 



The Myth of "A Rich Man's War" 

by those near and dear to them. But 
I do beheve it to be a just contention — 
not in the interest of the individual, but 
of the welfare of the community — that 
the same principle which is applied in the 
case of the conscription of men should 
hold good for the conscription of income 
or profits; i. e., so much thereof should be 
taken by the State as is required by a 
prudent estimate of the task before it 
and as best promotes the accomplishment 
of that task, bearing in mind that the 
preservation of the country's economic 
power is next in importance for winning 
the war to its military power. Vindictive- 
ness, extremist theories and demagogism 
ought to have no place in arriving at that 
estimate. 

I have no patience with or tolerance for 
the "war profiteer," as the term is under- 
stood. The *Var hog" is a nuisance and 
an ignominy. He should be dealt with 
just as drastically as is possible without 
doing damage to national interests in the 
process. But neither have I patience 
with nor tolerance for the man who would 
use his country's war as a means to 
promote his pet theories or his political 



The Myth of "A Rich Man's War" 

fortunes at the expense of national unity 
at a time when we should all be united in 
mutual good will and co-operative effort. 

And if we do talk about the formula, 
"conscription of men — conscription of 
wealth," let it be understood that we have 
called less than 5% of the Nation's entire 
male population, but have called from 
incomes, business profits and other im- 
posts falling principally on the well-to-do, 
approximately 90% of our war taxation, 
not to mention the contribution to the 
Red Cross, the Y. M. C. A. and other war 
relief activities. 

Let me add in passing that the children 
of the well-to-do have been taken for the war 
in proportionately greater numbers than 
the children of the poor, because those 
young men who are needed at home to 
support dependents or to maintain es- 
sential war industries are exempted from 
the draft. 

Moreover, to an overwhelming degree 
the sons of the well-to-do have not waited 
to be conscripted. They have vol- 
unteered in masses — a far greater per- 
centage of them than those in less 
advantageous circumstances. That is 

—41— 



The ]\I)^h of "A Rich Man's War" 

merely as it should be. Having greater 
advantages, they have corresponding 
duties. Not having dependents to take 
care of, they can better afford to volunteer 
than those less fortunately situated. 

But the patriotic zeal of the sons of the 
well-to-do in coming forward to offer 
their lives to the country does give a 
doubly false and sickening sound to the 
rantino^ of the as^itator who would arouse 
class hatred — who calls this ''a rich man's 
war and a poor man's fight" when an 
overwhelming percentage of the sons of 
the men of means have eagerly and freely 
offered themselves for military service, 
when the draft exemjption regulations dis- 
criminate not, as in former icars, in favor 
of the rich mans son but in favor of the 
poor icomans son, and vrhen capital and 
business pay more than four-fifths of our 
war taxation directly and a large share of 
the remaining one-fifth indirectly. 

I do not say all this to plead for a re- 
duction of the taxation on wealth, or in 
order to urge that no additional taxes be 
imposed on wealth if need be. There is 
no limit to the burden which, in time of 
stress and strain, those must be willing 

—42— 



The Myth of "A Rich Man's War'* 

to bear who can afford it, except only 
that limit which is imposed by the con- 
sideration that taxation must not reach 
a point where the business activity of the 
country becomes crippled, and its eco- 
nomic equilibrium is thrown out of gear, 
because that would harm every element 
of the commonwealth and diminish the 
war-making capacity of the Nation. 



THE question of the individual is not 
the one that counts. The question 
is not what sacrifices capital should 
and would be willing to bear if called 
upon, but what taxes it is to the public 
advantage to impose. 

Taxation must be sound and wise and 
scientific, and cannot be laid in a hap- 
hazard way or on impulse or according to 
considerations of politics. Otherwise, the 
whole country will suffer. History has 
shown over and over again that the laws 
of economics cannot be defied with im- 
punity and that the resulting penalty 
falls upon all sections and classes. 

— 13— 



The Myth of ^'A Rich Man's War" 

I realize but too well that the burden 
of the abnormally high cost of living, 
caused largely by the war, weighs heavily 
indeed upon wage earners and still more 
upon men and women with moderate 
salaries. I yield to no one in my desire to 
see everything done that is practicable to 
have that burden lightened. But ex- 
cessive taxation on capital will not ac- 
complish that; on the contrary, it will 
rather tend to intensify the trouble. 

We men of business are ready and will- 
ing to be taxed in this emergency to the 
very limit of our ability, and to make 
contributions to war relief work and other 
good causes, without stint. The fact is 
that, generally speaking, capital engaged 
in business is now being taxed in America 
more heavily than anywhere else in the 
world. We are not complaining about 
this; we do not say that it may not be- 
come necessary to impose still further 
taxes; we are not whimpering and squeal- 
ing and agitating, but — we do want the 
people to know what are the present facts, 
and we ask them not to give heed to the 
demagogue who would make them believe 
that we are escaping our share of the 
common burden. 

—44— 



The Myth of "A Rich Man's War" 

May I hope that I have measurably 
succeeded in demonstrating that the 
allegations with which the propagandists 
of disunion have been assailing the public 
mind are without foundation in fact. 
And may I add, in conclusion, that the 
charge of *'big business" having fomented 
our entrance into the war is one which, 
apart from its intrinsic absurdity, is a 
hateful calumny. Business men, great or 
small, are no different from other Ameri- 
cans, and we reject the thought that any 
American, rich or poor, would be capable 
of the hideous and dastardly plot to bring 
upon his country the sorrows and suffer- 
ings of war in order to enrich himself. 

Business men are bound to be exceed- 
ingly heavy financial losers through 
America's entrance into the war. Every 
element of self-interest should have caused 
them to use their utmost efforts to pre- 
serve America's neutrality from which 
they drew so much profit during the two 
and a half years before April, 1917. 
Every consideration of personal advan- 
tage commanded men of affairs to stand 
with and support the agitation of the 
*'peace-at-any-price" party. They 

—45— 



The^hlOi of "A Rich Man's War" 

spumed such ignoble reasoning; they re- 
jected that affiliation; they stood for war 
when . it was no longer possible, with 
safety and honor, to maintain peace, be- 
cause they are patriotic citizens first and 
business men afterward. 

The insinuation that "big business" 
had any share in influencing our Govern- 
ment's decision to enter the war is an 
insult to the President and Congress, a 
hbel on American citizenship, and a 
mahcious pen'ersion or ignorant mis- 
conception of the facts. Those who con- 
tinue to circulate that insinuation lay 
themselves open to just suspicion of their 
motives and should receive neither cred- 
ence nor tolerance. 



— 4f^ 



